A Corporation's Conscience

Ronald McDonald Houses around the world offer families a way to stay in proximity to the hospital when a seriously ill loved one is undergoing treatment. It’s a universally applauded charitable endeavor for McDonald’s, and if it happens to prompt an admiring public to buy more hamburgers, so much the better.

Are Ronald McDonald Houses an example of doing good for its own sake, or because it’s better for business?

The question gets to the core of an unusual discussion about corporate ethics sponsored by Catholic University’s Law and Public Policy Program on Feb. 25. “Innovative Approaches to Advancing Corporate Morality” assembled a panel of four experts for a two-hour examination of corporate philanthropy, ethics and honesty.

The program was conceived in part as an acknowledgement of the vast power of corporations today. In terms of global power and influence, they are often on par with governments. Corporate decisions can cause recessions, devastate ecosystems or help to rebuild a ravaged Haiti.

“Is it time to rethink our notion of corporations as purely economic actors?” asked Professor Sarah Duggin (above) director of the Law and Public Policy Program, during her introductory remarks.

Clearly the answer is yes. The panelists brought divergent points of view about what corporate motives should be for advancing the public good.

Carolyn Berkowitz, vice president of community affairs of Capital One Financial Corp. and president of the company’s philanthropic arm, Capital One Foundation, said her company views activities such as funding school, health and education initiatives as both good corporate citizenship and good business.

“If the social problems we are targeting go away, it leads to healthier customers and better business,” she said.

But if a corporation is favorably perceived as a good guy, does that necessarily equate to more loyal customers and booming profits?

In fact, there isn’t much of a link, noted Professor David Vogel of the University of California, Berkeley’s Haas School of Management. Vogel, the author of the award-winning book, The Market for Virtue: The Potential and Limits of Corporate Social Responsibility, said marketplace reward is not the reason a company should choose to do good.

“It’s simply below the radar screen for most customers,” Vogel said. “The importance of corporate social responsibility as a source of competitive advantage is modest.”

A corporation’s commitment to ethical and moral behavior should spring from its culture, if not from its balance sheet, remarked Professor Lyman P. Q. Johnson of the Washington and Lee School of Law. Johnson cited a Swedish study concluding that the personal values of the director of a company play a larger role in corporate social responsibility than any other factor.

“We need to develop a moral grammar for talking about corporations in moral terms,” said Johnson (above). Were it up to him, Johnson would make Pope Benedict XVI ‘s 2009 encyclical Charity in Truth required reading for every business student in the country.

Damon Silvers, director of policy and special counsel for the AFL-CIO, also contributed to the discussion, offering the historical account of corporate social responsibility from the perspective of workers and other non-shareholder constituents.

The program was held at the National Press Club in Washington, D.C., as the third in a series from the Columbus School of Law titled “Critical Insights in the Law and Law Practice: Ethical and Moral Responsibility.”